Eyman I-747 Express Train Roars Through Olympia

With train bells clanking and next year election year jitters agitating them like caffeine addicted fiends, Washington State legislators at the prodding of Governor Gregoire, jumped aboard the Eyman Express. With Train Engineer Christine Gregoire driving and with Conductors Frank Chopp and Lisa Brown punching tickets and screaming this train is leaving, Washington State Legislators stampeded, trampling over each other trying to get seats on the train before it left.

Eyman could be seen laughing his head off at them. He mocked them and insulted them even as they bought his over hyped tickets for the train ride and pledged to carry out his revenue cutting agenda framed as the people’s will.

Watching the Washington State Legislature in Special Session yesterday as it dealt with Governor Gregoire’s request to re-enact Eyman’s 1% Property Tax Limit was quite a spectacle.
Unfortunately it was a sad one. They treated the Eyman contrived 1% property tax limit as if it had some relation to a reasonable and justifiable policy proposal when in reality it only related to Eyman’s continued drive to limit government and taxes.

Credit needs to go to those legislators that in the end voted no on re-enacting I-747. In the House they were Representatives Dickinson, Hunt, Nelson, Pederson, Pettigrew, Santos, Simpson and Sommers. In the Senate they were Senators Fairley, Jacobsen, Kline, Kohl-Welles, McDermott, Murray, Pridemore, Spanel and Weinstein. In addition Senator Oemig made strong efforts to amend the legislation as did Senator Kohl -Welles.

Eyman’s I-747 sugar candy solution to people hurting from rising property taxes is nothing more than that – sugar candy. The people who are most in need of property tax help are lower and middle income people who pay a higher proportion of their income in property taxes than do high income people. I -747 does not change that equation since it’s an across the board limit to a 1% increase per year in overall property tax collections. The law benefits rich property owners more than less wealthy ones.

There was no ‘taxpayer revolt’ in Olympia yesterday. Conspicuously absent were homeowners demanding that I-747 be re-enacted. Maybe they know that it really gives very little tax relief , not having seen any significant impact for the 5 years it was law before the Washington State Supreme Court overturned it.

What there was yesterday in Olympia was a railroad brought on by elected officials unwilling and unable it seems to take the time to enact real property tax reform that would help low and middle income taxpayers. What occurred was that the Legislature again turned a blind eye to the fact that I-747 does not provide relief to those that need it most – low and middle income homeowners dealing with property tax bills rising faster that their income and who pay a greater percentage of their income in property taxes than do the wealthy.

The legislature has held hearings the last two years on real property tax relief in the form of a Homestead Exemption that some 40 states have. The Washington State Budget and Policy Center has done detailed analysis on another form of property tax relief known as circuit breaker legislation. But Gregoire didn’t even put these on the table.

Instead Gregoire comes out with an unvetted bill which is nothing more that a reverse mortgage. She called her property tax relief – a deferral of up to one half of property taxes per year for people earning less than $57,000 a year that have lived in their home for 5 years and have equity buildup.

Watching the Legislators deal with the Governor’s tax deferral bill was truly like watching sausage being made. The bill was surprise legislation not introduced in the Legislature before, that had only a day to be analyzed and considered. Committee Chairs were not allowing amendments to be made to it in the hope it would be rushed through. Many objections were raised in the two committee hearings, particularly by county auditors who saw many problems.

It was obvious from the discussion and critique at the hearings in the House and Senate that the bill had lot of problems. One Legislator characterized it as no more than a reverse mortgage that as a mortgage broker he said he would never offer. Eyman called it predatory lending. In this I agree with him. The current senior deferral has a fixed 5% interest rate.

The interest rate on the Governor’s deferral bill is 2% over the current Fed short term lending rate which is now 5%. This make the interest 7% this year. Since it is in essence an adjustable interest rate, what happens when inflation surges? The homeowner unfortunately goes more and more into debt.

Probably very few people will take advantage of her tax deferral. But she will still claim that she did something.